Which Type Of Life Insurance Is Better Now A-days?
Posted December 1, 2009 – 4:33 am in: term life insuranceIs term life insurance better?
Tags: Adays, Better, Insurance, Life, Type, Which-
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Is term life insurance better?
Tags: Adays, Better, Insurance, Life, Type, Which
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The type that meets your preset GOAL. What’s the GOAL of the life insurance? Sometimes, whole life is best. Most of the time, term meets the goal.
But there’s no way to tell, without a GOAL.
Just like, should you wear sneakers, or heels? Depends on what you’re doing!!
It would be term life insurance. Some advantages:
* Term life premiums are the lowest on the life insurance market, allowing younger customers to buy more coverage when they most need it. However, this is usually not the case over the full duration of the policy. Because premiums rise with each term policy renewal, the cost in later years will exceed the level premiums of a whole life insurance policy.
* Term insurance is the best solution for needs that will disappear with time, and when protection is needed for less than ten years. Financial advisers usually recommend that permanent life insurance is purchased if one needs protection for more than 15 years.
* Young people can buy considerable face amounts at very low costs and have the necessary protection even if they become uninsurable.
* Policy owners can always convert to a permanent policy at any time while their term life policy is in force, without evidence of insurability.
* Individual packages can be created, combining different types of term life with other types of cash-value life insurance, to cater for specific needs.
* The death proceeds are not subject to federal income and state inheritance taxes.
Regardless of all that has preceded this answer, term life is the most affordable, and as a rule makes the most sense. You can listen to the agent telling you how whole life is a grand idea whereby it builds cash value, but what he does not tell you is it can cost up to 10 times as much as term, and only pays you a pittance. Insurance is NOT an investment, it is only…… insurance.
Look into level term for as far out as you can get.
To simplify, term insurance is like renting. You sign a lease for a set period of time. You pay your rent you have a roof to live under. The lease is up, there is no guarantee that you will still have a roof to live under. You might be able to extend your lease you might not and your rent will go up. The return of premium that was previously mentioned is like security deposit. You pay extra into the policy and you get back what you paid.
Permanent insurance is like buying a house. You usually pay more than to rent. The reason you pay more is because you have ownership. You guild up equity (cash value). You can reach the point where you own it outright and you don’t have to pay anymore or you can remortgage or you can do a variety of other things. Full flexibility.
Universal Life is like a long term lease. Permanent renting. Variable policies are for unique situations only especially with the current market risks.
As previously stated, usually you will use a combination of permanent and term insurance to meet your current needs and wants. It really is about you and your situation. Let me know if you have any questions.
The answer to this question is quite possibly more complex than you anticipated. First, never let anyone tell you that whole life is a bad idea. People who make a blanket statement like that either have no idea what they are talking about, or simply don’t understand both types of policies. Either way, taking financial planning advice from someone like this is generally a bad idea.
Let me first let you know about some different types of insurance available, I will get into the pros and cons of them after. There is of course term life insurance, but within term you have conventional term and term with a return on premium, where if you do not die during the term of the policy, you get your money back. There is also whole life, and within whole life there are many different types. Some of the whole life policies, you pay until you reach 100 years of age, some you pay for a limited period of time, like a term policy. Finally, there are variable and universal policies which allow flexible payment options and the choice to invest your premium paymentss into a variety of funds and bonds to help grow the value of the policy.
I will only discuss the pros and cons of term and whole life as they are the most common.
Term insurance, you get the most bang for your buck here by being able to purchase more coverage for much less money. Due to the lower cost you can invest some of what the policy would cost otherwise. The real downfall of this type of policy is that if you do live past the term of the policy, usually a maximum of 30 years, you will no longer have any protection for your family. You may have been able to save a few bucks, but if you die after 31 years, what would your family do?
Whole life insurance offers protection no matter when you die, as long as you pay your premiums. This policy allows you to accumulate cash value that you can take loans against and often times the death benefit will increase as the cash value grows. I have a client that purchased $100,000 in coverage, but if interest rates continue the way they are now, this customer will have a policy worth over $300,000 if they survive to the age of 85. The real downfall to this policy is that it does cost more. To obtain a large policy can sometimes be cost prohibitive and it could make the premiums unaffordable if something were to happen to you.
The ideal situation (in the eyes of this insurance professional) is to purchase a mix of policies that meet your entire need and provide coverage both now and down the road. I purchase term policies for myself that would cover my mortgage and provide funds for my children to go to college and life comfortably, after 30 years, when my major expense are completed, my coverage will drop significantly and my family will still have coverage through my whole life policies that will cover expenses like the funeral and any estate taxes that they may need to pay.
My recommendation is to speak with a local insurance professional who can help you determine the right amount of insurance for you, and help youfind the right mix for the right price.
It depends on your income and what you can afford. Term is cheapest and gives you more insurance for your dollar.
Whole life and Universal life are most expensive and you get less insurance.